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Financial Economics

  • Module code: EC7008
  • Year: 2018/9
  • Level: 7
  • Credits: 30
  • Pre-requisites: None
  • Co-requisites: None

Summary

This module provides you with an understanding of the role of finance in the contemporary economic landscape, covering the central topics in modern, behavioural and critical financial theory. It explores the nature and the causes of modern financial innovation and the way it affects economic agents. It discusses proper policy responses and regulation that might tame financial instability and enhance economic growth. The breadth of student knowledge is expanded by consideration of empirical instances of the phenomena under investigation.

Aims

  • To give students an advanced  understanding of the functions, institutions and instruments of finance, and of how and why financial systems differ;
  • To critically examine and compare key concepts and models from modern financial theory and behavioural finance;
  • To critically examine critical theories of finance looking at the role of finance in contemporary capitalism;
  • To give students an advanced  understanding of modern financial innovation and the evolution of global and domestic systems of financial regulation;
  • To develop high-level skills in empirical investigation of contemporary financial issues.

Learning outcomes

On successful completion of the module, students will be able to:

  • Have an advanced understanding of the functions, institutions and instruments of finance, and how and why financial systems differ;
  • Critically appreciate key concepts and models from modern financial theory, and behavioural finance theory;
  • Demonstrate at an advanced level an understanding of developments in the financial system and its relationship to economic shifts in contemporary capitalism, and critically engage with theories from Critical Finance and the financialisation literature;
  • Understand the nature and determinants of financial innovation, it's impact on the broader economy and on financial stability, and to compare critically developments in the regulation of finance
  • Pursue empirical research of contemporary financial issues at an advanced level

Curriculum content

  • The role of finance,
  • The institutions and instruments of finance
  • Financial systems in historical and geographical context
  • Modern financial theory: Efficient Market Hypothesis, Capital Asset Pricing Model, Black-Scholes Options Pricing Model
  • Developments in Behavioural finance
  • Critical theories of finance
  • Financialisation and its impact on firms, households, governments and capital markets
  • Financial innovation and financial instability
  • Regulation: harnessing finance for growth

Teaching and learning strategy

The module is delivered by weekly workshops comprising a combination of lecture and seminar components. The lecture component of the workshops will discuss the key issues of each topic. Students can follow up with more detailed reading in their own time. Lecture components of the workshop lay the preparatory ground for the application of knowledge and expanded discussion with regard to practical issues via the seminar component. The seminar component of the workshops are intended to enhance students' understanding of the material covered in the lectures.

Breakdown of Teaching and Learning Hours

Definitive UNISTATS Category Indicative Description Hours
Scheduled learning and teaching 22 two hour workshops 44
Guided independent study Student independent study 256
Total (number of credits x 10) 300

Assessment strategy

This module is assessed through a class test (50%) at the end of the first half of the module, and an essay (50%). The class test will assess the fundamental aspects of the module listed below whilst, the essay, to be completed during the second teaching block, will assess the ability of students to write a report whilst pursuing taught themes in financial economics of interest to them. 

Mapping of Learning Outcomes to Assessment Strategy (Indicative)

Learning Outcome Assessment Strategy
Have an advanced understanding of the functions, institutions and instruments of finance, and how and why financial systems differ; Class test
Critically appreciate key concepts and models from modern financial theory, and behavioural finance theory; Class test
Demonstrate at an advanced level an understanding of developments in the financial system and its relationship to economic shifts in contemporary capitalism, and critically engage with theories from Critical Finance and the financialisation literature; Essay
Understand the nature and determinants of financial innovation, it's impact on the broader economy and on financial stability, and to compare critically developments in the regulation of finance Essay
Pursue empirical research of contemporary financial issues at an advanced level Essay

Elements of Assessment

Description of Assessment Definitive UNISTATS Categories Percentage
Coursework 3000 word essay 50%
Practical exam Class test (2 hours) 50%
Total (to equal 100%) 100%

Achieving a pass

It IS NOT a requirement that any element of assessment is passed separately in order to achieve an overall pass for the module.

Bibliography core texts

Brett, M. (2003) How to read the Financial Pages London: Random House

Copeland, Thomas E., J. Fred Weston and Shastri, Kuldeep (2003) Financial Theory and Corporate Policy London: Pearson

Hull, J. C. (2011) Fundamentals of Futures and Options Markets, Edinburgh: Pearson Education Limited.

Howells, P. and Bain, K (2007) Financial Markets and Institutions, London: Pearson Education Limited

J. Toporowski and J. Michell (2012) Handbook of Critical Issues in Finance London: Edward Elgar

Bibliography recommended reading

Akerlof, G. A., and Shiller, R. L. (2009) Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism, Princeton: Princeton University Press.

Davidson, P. (2002) Financial Markets, Money and the Real World, Edward Elgar.

Goodhart, C. (1989) Money, Information and Uncertainty [Second Edition], London: Macmillan Education Ltd.

Hoffman, P. T., Postel-Vinay, G., and Rosenthal, J.-L. (2007) Surviving Large Losses: Financial Crises, the Middle Class, and the Development of Capital Markets, Cambridge and London:

Miller, M. H. (1992) "Financial Innovation: Achievements and Prospects," Journal of Applied Corporate Finance, 4(4): 4-11.

Shiller, R. J. (2012) Finance and the Good Society, Princeton and Oxford: Princeton University Press.

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